* Respite for euro zone bonds after sharp selloff
* Bund yields edge off 5-month lows
* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr (Updates prices, adds European politics)
LONDON, Jan 15 (Reuters) - Euro zone borrowing costs pulled back from multi-month highs on Monday after a hefty selloff last week on expectations that the European Central Bank could end its massive stimulus sooner than anticipated.
German Bundesbank President Jens Weidmann, normally one of the staunchest critics of the ECB's ultra-easy policy, said late on Friday the risk of an imminent hike in interest rates was low.
Those comments bought some respite to battered bond prices, but overall trade was subdued with U.S. markets closed for a holiday on Monday.
Analysts said heavy redemptions this week and less new issuance compared with last week also supported prices. Sentiment towards fixed income has taken a hit after a week of heightened talk about an end to stimulus in Japan and the euro zone. Data on Friday showed underlying U.S. consumer prices posting their biggest gain in 11 months in December, sending two-year Treasury yields to more than 2 percent for the first time since the financial crisis.
Still, by midday trade on Monday, most euro zone government bond yields were down 1-2 basis point on the day. Germany's 10-year year Bund yield was at 0.50 percent, off a five-month high hit on Friday at 0.54 percent. Two-year yields were around 2 basis points below more than six-month peaks hit last week.
"There are chances for more selling but also reasons to be cautious," said Chris Scicluna, head of economic research at Daiwa Capital Markets.
"Inflation numbers in the euro zone this week should confirm the price story is not that different from last year and we are looking at the chance of a downward revision," he said, referring to the final release of euro zone December inflation data on Wednesday.
But with oil hovering below three-year highs near $70, price pressures could pick up in coming months.
Markets are also waiting for the release later on Monday of the ECB's weekly reporting of its asset purchasing programme.
The euro meanwhile hit a fresh 3-year high, buoyed by expectations of tighter policy from central banks and optimism about the increased likelihood of a pro-European coalition in Germany.
German Chancellor Angela Merkel's Christian Democrats are moving towards formal coalition talks with the Social Democrats, raising hopes Europe's largest economy will finally have a new government.
On Monday, Bank of Japan Governor Haruhiko Kuroda reiterated the central bank's resolve to maintain its massive stimulus programme, but his positive comments on inflation and the economy sent the yen to a four-month high versus the dollar ..
Elsewhere, Spanish Prime Minister Mariano Rajoy said that Madrid would continue to run Catalonia's government if sacked former leader Carles Puigdemont is voted regional president by the Catalan parliament. (Reporting by Dhara Ranasinghe and Fanny Potkin; Editing by Toby Chopra/Jeremy Gaunt)